It is shown that South Korea’s memory industry has entered normal phase as stocks of memories are quickly being used up. Although there are still global uncertainties such as the trade war between the U.S. and China, it can be seen that the semiconductor market in South Korea is finally recovering as reduction of stocks indicates recovery in demands. The industry expects that memory demands will be solid during the fourth quarter as well and that conditions of the market will be improved much more next year due to demands for 5G network.
SK Hynix made a statement on the 24th that its stocks of DRAMs are reaching a normal level.
“While the level of our stocks of DRAMs would last about 7 weeks at the end of the second quarter, the level had gone down to about 5 weeks at the end of the third quarter.” said a spokesperson for SK Hynix. “We expect that the level will be about the same during the fourth quarter.”
Level of stocks of semiconductors is usually mentioned in a unit of ‘week’. Fact that the level of SK Hynix’s stocks of DRAMs means that SK Hynix can respond to market demands for about 5 weeks.
Level of stocks in 2018, when demands for DRAMs were booming, was around 2 weeks. However, stocks had started to accumulate since the end of last year when conditions of the market had worsened.
SK Hynix stated that its stocks are quickly running out as the amount of DRAM shipments in the third quarter was 23% higher than the amount of DRAM shipments in the second quarter. It explained that its stocks are running out as Chinese and American data center companies and Chinese mobile manufacturers, which are SK Hynix’s major customers, have resumed purchasing DRAMs.
According to the industry, it is heard that the level of Samsung Electronics’ stocks has gone down considerably as well. It is estimated the level of its stocks of both DRAMs and NAND flash memories has halved compared to the first half. Some say that the memory market is finally recovering as stocks are being used up rapidly.
President Jin Kyo-young of Samsung Electronics Memory Business Department who attended a celebration of ‘12th Anniversary of Semiconductor’ that was held at Dragon City Hotel in Yongsan on this day did not say much when asked about recent conditions of the market and recent trend in memory price. It is likely that he saved his breath as Samsung Electronics is set to announce its third quarter performance next week.
However, the downward trend in memory price that has been pressuring the performance of South Korean semiconductor companies has already come to a standstill. DRAM price (fixed market price of DDR4 8Gb) has not gone down any further for the past 3 months while NAND flash memory price (fixed market price of 128Gb MLC) has been going up since July.
The industry is focused on this quarter and next year. SK Hynix is looking at the situation of its stocks in the fourth quarter positively for now.
“We estimate that there will be another single figure increase with demands.” said a spokesperson for SK Hynix. “Although there may be a small change during the first quarter of next year due to seasonal factors, we expect that our stocks will continue to run out as the year comes to an end.”
“We expect that 5G Smartphones will also contribute as the number of 5G Smartphones will increase from tens of millions this year to 200 million next year due to increased subsidy from Chinese Government and release of 5G IC (Integrated Chip).” said the same spokesperson for SK Hynix while expressing an air of expectancy towards 5G Smartphone.
However, SK Hynix is planning to be conservative with its investments. SK Hynix estimates that the amount of its investments in 2020 will be much lower than the amount of its investments this year due to foreign uncertainties even though the memory price is stabilizing and demands for memories are increasing.
“Although we cannot say the exact amount of our investments in 2020 yet, we will take appropriate actions according to market conditions.” said President Lee Seok-hee of SK Hynixw who attended the ceremony regarding SK Hynix’s plan on plant and equipment investment.
Meanwhile, other representatives from the industry who attended the ceremony promised cooperation to raise the status of ‘Semiconductor Korea’.
“We want to show our appreciation for our semiconductor industry, which is leading our economy, for their continuous efforts and right now is when private-public collaboration is very important to respond to imminent international environment.” said Minister Sung Yoon-mo of Ministry of Trade, Industry and Energy. “We want to request our industries to focus more on stabilizing supply of materials, components, and equipment so that we can supplement and strengthen areas that we are currently vulnerable in.”
Agreement ceremony for ‘System Semiconductor Win-Win Fund’, which is an exclusive fund to support fabless business, and awards ceremonies were also held at the ceremony. CEO Seo In-hak of Lam Research Korea who has localized semiconductor equipment and components, prepared a groundwork to enter global markets, and contributed to mutual growth and win-win cooperation with South Korean partners received a silver medal of industrial effort. Executive Director Kim Min-koo of Samsung Electronics who has made a contribution towards commercialization of world’s first 5G modem chip received a bronze medal of industrial effort.
In addition, 47 other representatives received different government awards.
Staff Reporter Kang, Hyeryung | kang@etnews.com